3. Knowing the Basics of Investing
We often hear advice about investing on time, effort, and things that truly matter. It’s the same with your finances. You invest your money in order to get something positive and beneficial in return.
Let’s take a closer look on what to consider before you take the plunge with investments:
- GOAL: What are your investment objectives?
- TIME: When will you use the money??
- INTEREST: Will your earnings be higher than inflation?
- MONEY: How much risk can you take?
It is important to be wary about INFLATION because it lowers the buying power of your hard earned money, without you even noticing it! So by outpacing inflation, which is largely unpredictable, you can have generally higher returns compared to merely saving it in a bank deposit or piggy bank
Of course, there are also RISKS that we should be aware of. Volatile market conditions, uncertain economic performance, and the chance of losing money makes investing very challenging. The good news is, there are several ways to manage these investment risks:
- Be armed with knowledge
- Look at the long-term
- Know your risk appetite
- Diversify by investing in several financial instruments
So, are you ready to take that investment leap? Take the exercises below to find out what suits you best!